2012 Budget Basics Presentation

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Transcript of 2012 Budget Basics Presentation

A Colorado PerspectiveLocal Government Budget BasicsWhere To StartFinancial PlanCommunication DeviceReflection of PrioritiesTool for AccountabilityWhat is the budget and why do we need to do it?When do we do the budget?Budgets are Year Round Documents Important Dates:August 25October 15December 10December 15December 31January 31A budget hearing must be scheduled after the preliminary presentation.Make sure you have provided your mill levy certification to the BOCC of your county(ies) by the 15thwww.dola.colorado.gov/e-filing1313 Sherman St. Room 521, Denver, CO 80203Budget MessageThe 2013 General Fund Budget is primarily derived from property tax and sales tax revenue with a small amount of License and Fee revenue and other revenue. The primary uses are for the categorical expenditures that are laid out. Some key aspects of this year’s budget are reduced revenues in comparison to some previous years. The economic recession had reduced sales tax revenues and we expect that revenue to be relatively flat. During 2012 there were unexpected expenditures in General Government due to a costly settlement. We have also had to make cuts in this 2013 budget due to depleted fund balances. The budgetary basis of accounting is modified-accrual.2013 Budget NumbersJarrod BiggsBudget Program ManagerDivision of Local Government(303) 866-4493jarrod.biggs@state.co.usRevenue LimitationsTABOR5.5% Property Tax Revenue LimitationOther LimitationsProperty TaxAV Projections first available Aug. 25

Sales Tax

Other RevenuesProprietary Funds?

Investment Income?

Intergovernmental Revenue?RevenuesExpendituresThe 5.5% limit value is calculated annually by DOLA after the preliminary certification of value and the final certification of value is provided by the county assessors. The estimate (Aug.) and final value (Dec.) are made available online and are sent to those local governments when they are calculated.It is important to look into your own local government’s history to see if voters have created any other limitations that may apply. In particular, home rule municipalities many times may have revenue limits written into their charters.Knowing and understanding your own local government’s limitation details are essential!(Assessed Value x Mill Levy) ÷ 1000 = RevenueRates x Users = RevenueRate of Return x Principal = RevenueOtherwise known as: Statutory Format RequirementsRevenues and Expenditures - Including explanation of expenditures by object and revenues by source.

Three Years of comparative data

Budget Message- Write your local governments story for the year

Beginning and Ending Fund Balances

Budget Balance - Expenditures must be less than or equal to revenues plus fund balances.

A Lease Purchase Supplemental - When applicable

Signed Certification StatementDe-BrucingEnterprise Funds“The budget process mediates between groups and individuals who want different things from government and determines who gets what.” – Irene Rubin, The Politics of Public BudgetingFinalizing the Budgetwww.dola.colorado.gov/budgetsAmending the BudgetSubmitting the BudgetWho has to do the budget?The board of each local government designates a person to prepare a budget. PresidentTreasurerManager/AdministratorFinance DirectorSecretaryThe individual designated the budgeting task may then delegate tasks to others (they may simply run the process).Simply stated, you have to do a budget. I would ask, how could a local government not?!What is supposed to be in the budget?There are a number of ways to budget for expenditures:Incremental BudgetingPerformance Budgeting Zero Based Budgeting Fixed-ceiling BudgetingOpen Ended BudgetingPriority Based Budgeting

Factors to consider:Consumer Price IndexPrice agreementsCommodity pricing< or =must beLook at national, state, and your own local indicators! (you will find out what is effective over time)Fiscal Year Spending Limit – The FYS limit actually limits the revenue a local government can collect without requiring a refund. Generally when people talk about TABOR they are discussing this aspect of the law.

Revenue collections are limited to a base year value, plus inflation, plus a local growth factor. There are exempt revenues which include: gifts, collections for another government, federal funds, pension fund earnings and others.

Property Tax Revenue Limit – The same as the FYS limit but specifically applied only to property tax revenue.

Mill Levy Increase Limitation – Any increase in mill levy must be pre-approved by a vote of the local governments constituents.

Debt Limitation – Increased general government debt must be pre-approved by a vote of the local government’s constituents.

3% Emergency Reserve Requirement – All local governments must keep 3% of their FYS value as an emergency reserve to be used only in declared, non-financial emergencies.Funds that operate primarily on a fee-for-service basis, are exempt from being included within a local government’s FYS limit if they receive less than 10% of their revenue from governmental sources (taxes).

These funds are typically for Water, Wastewater, Recreation, Utility or other types of activities.Fund accounting is the process where dollars are segregated into different "pots", "buckets", or [insert other analogy here].Examples of funds:- Conservation Trust - Road and Bridge Fund- Water Fund- Wastewater Fund- Special Revenue Fund- General FundDepending on the source, funds can be created by requirement or by convenience (you should always discuss the implications of altering funds with your auditor)Aka - Voter Approved Revenue ChangeMany local governments have had elections to remove themselves from provisions of TABOR and/or the 5.5% Limit.

Each local government must craft their own ballot language to take to the vote, therefore each result has the ability to be different; so THERE IS NO UNIFORM DE-BRUCING. It is important if your local government has de-bruced to have the language and a legal interpretation of what that allows your local government to do.)

A local government can not “de-bruce” from the requirement to keep a 3% emergency reserve.For any amendment, a budget hearing must be noticed and held just as in the regular budget adoption process.

A budget Amendment is a transfer between two funds that have been appropriated

A budget Supplemental is to expend unexpected revenue that is received in excess of budgeted revenue. Property tax revenue above projections can not be expended until the following budget year.

A budget Revision is a reduction in an appropriation to reflect reduced revenues.Passing the Budget and Certifying A LevyNEW - E-filing Portalwww.dola.colorado.gov/e-filingWe have developed an e-filing portal to expedite the process of filing budgets. It is a simple sign up process to set up a "budget contact" account which will have the ability to file budget related documents to DOLA.

Otherwise send it to us:The process to certify a levy, is to communicate with the Board of County Commissioners of each county in which a local government is situated.

The process should follow:Once completed, and budget hearing has been held, the budget is adopted. The calculated mill levy is certified by the governing body. An appropriation is passed. Once completed, the certified mill levy should be communicated to the BOCC(s)(see form DLG-70).

Once the budget is adopted, mill levies certified, appropriations completed, and the levy communicated to the county. Send your budget to DOLA!Division of Local Governmentc/o Budget Program1313 Sherman St. Rm. 521Denver, CO 80203Include the basis of accounting!